What the item represents
Goodwill is an item recorded under fixed assets (intangible fixed assets) on the balance sheet. When the actual purchase price paid in an M&A exceeds the fair value of the target company's net assets, that difference is recorded as goodwill.
Points to watch when reading it
Treatment of goodwill differs depending on the accounting standard applied: under Japanese GAAP, it is systematically amortized over a set period, whereas under International Financial Reporting Standards (IFRS), it is not systematically amortized but is instead assessed each period through an impairment test.